CFPB Resets Lender Expectations Before 1M Long-Term Forbearances Expire
Welcome to Sagent’s weekly homeowner hardship briefing where we analyze the latest market data, including the Mortgage Bankers Association’s forbearance data, to offer key takeaways for servicers.
Here’s what’s new this week:
Forbearance Volume Trends Down (But Re-entries Continue to Climb)
According to the MBA’s latest forbearance data, this week we’re seeing a continued positive trend with 17 straight weeks of declines in total forbearance volume. This week, 3.91% of all mortgage loans were in forbearance, down from 3.93% last week. This works out to roughly 2 million borrowers still in forbearance.
While this week’s decline is slower than the last few, it still shows progress in the right direction.
Even so, forbearance re-entries are climbing — up to 6.2% this week, up from 5.9% last week — and the continued increases are a sign that, while things are improving, there are still pockets of borrowers that have not fully recovered.
CFPB Unveils New Servicer Guidelines
All this is happening against the backdrop of newly finalized servicer rules from the CFPB, announced June 28. These new rules have been specifically written to address the needs of borrowers in forbearance.
Highlights of the final set of rules include:
- With limited exceptions (vacant and abandoned properties, unresponsive borrowers, borrowers for whom a loss mitigation option is not available) foreclosures cannot happen through the end of 2021.
- The allowance for certain streamlined loan modification options based on the evaluation of an incomplete loan application
- Establishing standards around the handling of early intervention for borrowers who are in a COVID-19 forbearance.
The Bottom Line
All of this signals the “beginning of the end” when it comes to forbearance accommodations and foreclosure prohibitions. As demonstrated in the narrative above, the general improvement in overall forbearance volume is somewhat offset by the gradual rise in re-entries; so while things are improving, there is still work to be done — work that will take place under the watchful eye of the CFPB under these new servicing rules.
I’m on standby to answer your policy questions and talk about how to help you care for borrowers during this critical phase.